There’s always a chance of danger when starting any business, no matter what industry you work in. You’ll always be responsible for what happens with your business, even before you employ your first employee if the correct insurance coverage is not in place. Just one catastrophic event may be more than enough to destroy a new business. Fortunately, business owners can benefit from a range of commercial insurance that will safeguard them against any potential risk. We’ll go through the different types of business insurance that every startup should have.
List of Contents
Business liability insurance
Business liability insurance, or errors and omissions (E&O) coverage, is required to cover your company against allegations of negligence when performance falls short. Every sector has its own set of insurance issues, so your professional liability insurance coverage will most likely be tailored to your area of expertise. You should read through your policy to discover what you are and are not covered against.
Your general business liability coverage should include protection in the event of:
- Bodily injury – If anyone is injured while on your business’ grounds, your insurance will cover their medical treatment.
- Property damage – If anyone causes damage to the property where you operate, liability insurance can pay for repairs.
- Medical payments – Similar to body injury, this can cover you as the business owner if you are injured during operating hours.
- Advertising injuries – This is protection against advertising hazards like libel, slander, invasion of privacy, and copyrights.
Business Property Insurance
If you operate your own office or rent a space, you’ll need property insurance. Business or commercial property insurance will provide coverage for:
- Equipment – Such as your computers or servers used to conduct business.
- Inventory – The products that you are selling.
- Assets – Company-owned property that you use for a business like company cars. This can even include furniture you keep within the office.
- Structure – The building itself where your business is operating from.
Property insurance protects your business against fire, theft, and natural disasters. If your business insurance doesn’t cover massive destruction events like floods and earthquakes, but these types of disasters are common, you should consider asking your insurance agent about how to safeguard your business.
Business property can payout in the following ways:
- Replacement cost – Doesn’t factor in depreciation of the property and provides a payout for repairs and replacements.
- Actual cash value – The payout is based on the deprecation of the property.
Workers Compensation Coverage
Workers’ compensation insurance is required once your firm has one employee. It will cover your company for medical treatments, disability, and death benefits if one of your workers is injured or dies as a result of working for your business. While your firm may try its best to follow safety regulations, things can go wrong, and you’ll want to be protected in the event of an accident.
Residential Business Coverage
Many successful firms began as home-based enterprises. Unfortunately, homeowners’ insurance does not cover your business in the same manner as commercial insurance does. The answer to this all-too-familiar problem is to get extra coverage. However, the addition of supplementary insurance is not a one-size-fits-all solution; thus, you must consult with your insurance professional about what can and cannot be covered.
Product Liability Coverage
If you run a business that produces items for sale, product liability insurance is required. Even though you take every precaution to assure that your goods are safe and user-friendly, you may still be sued for damages caused by them, in which case you will want to be protected. Product liability insurance will protect your company in the case of a lawsuit, and each policy can be customized.
Car Insurance
If you or any of your workers drive a car to conduct business, auto insurance should be added to the list of coverage you have. Vehicle insurance will ensure that your firm is protected if an accident occurs and you or your employees are found to be at fault. You can get more advanced car insurance coverage that will cover third-party injuries and liability for damages with some basic vehicle insurance policies.
Business car insurance includes the following coverages:
- Liability coverage – The most basic part of car insurance that covers any bodily injuries and property damage you or an employee cause while driving a company car.
- Collision coverage – This covers you for damage done to your work vehicle(s) in an accident.
- Comprehensive coverage – This covers damage to your work vehicle(s) while they aren’t in use, like crime-related and weather hazards.
- Uninsured motorist coverage – If you or one of your employees were to encounter a driver driving illegally without insurance, this will cover the damages they would be otherwise unable to.
Business Interruption Coverage
No company ever wants its operations to be disrupted because of disasters like a fire, storm damage, or even vandalism. If one of these calamities strikes, your business will lose profits and not be able to operate in its office, produce goods, or make sales calls. Business interruption coverage can protect you from lawsuits resulting from your inability to complete work, potentially saving your company significant expenses.
Business Cyber Insurance
Operating your business electronically comes with its own threats of cyberattacks. That’s what cyber insurance, or data breach insurance, is for. You may store your customer’s payment information, and you don’t want that falling into the wrong hands. If the internet and technology are essential to your business, consider adding cyber insurance to be covered for any resulting damages.
Business Crime Insurance
Cyber threats are just half the battle when it comes to criminal damage to your business. Sometimes commercial property insurance won’t cover you fully for crimes that cause damage in your office or storefront. Business crime coverage, however, does.
Business crimes insurance covers damage or business interruption caused by:
- Employee fraud or theft – If someone were caught stealing from the company or providing false information during the hiring process.
- Burglaries and break-ins – Every business has to have security to ward off thieves. If they were to fail, then insurance can step in and cover the damages for any money or assets stolen.
- Forged documents – If a major piece of crucial paperwork crucial was forged, then crime insurance will cover it.
Employment Practices Liability Insurance
Claims from employees like discrimination, sexual harassment, and wrongful terminations are serious and should always be resolved fairly. Sometimes legal assistance may be required, and those expenses are what employment practices liability insurance (EPLI) cover.
Errors And Omissions Insurance
Another type of legal business insurance is errors and omissions (E&O) insurance which covers legal assistance and costs against claims of misconduct and negligence. This insurance is more suited for businesses whose main practice is advising their clients.
Liquor Liability Insurance
Being in the alcohol production, distribution, and selling of a business requires jumping through a lot of hoops. You have to get licensed and follow very specific regulations. But this insurance is for those that serve and sell it. Liquor liability covers any damage that an intoxicated customer may cause due to having too many drinks. Legal fees and settlements, along with property damage and medical costs, are also covered.
Inland Marine Insurance
The name for this insurance really should be inland and marine insurance because it covers any products or assets you have in transit, whether it be by land or water. This is ideal insurance for companies on the move or specializing in transportation since it covers items you regularly transport.
How Much Does Business Insurance Cost?
Based on everything you’ve just read, you can infer that the cost of business insurance will depend on the number of the preceding coverages you put on your policy. Of course, insurance is also heavily determined by personal factors. In this case, it’s the industry you are in, the location of your business, and the number of employees that play a role in determining what your premiums will be.
Conclusion
This information will assist your company in learning how to safeguard itself with the best insurance. You can protect yourself against financial setbacks during the early phases of your business by ensuring that you have the appropriate insurance coverage in place.
It’s also crucial to understand that each insurance company has its own criteria, so double-check with your advisor to ensure you and your organization are covered. A general business owner’s policy, or BOP, which includes liability and property coverage, can cost around $2,200 every year or about $183 monthly. Cutting off property damage and only settling for liability can reduce it to $1,700. But, if you have gathered anything from this post, it’s that every bit of protection for your business counts, and it never hurts to think about the situations you may find yourself in when operating.
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